LegalizeFinance Act , 1993
PART I Income Tax, Income Levy, Corporation Tax and Capital Gains Tax
Chapter I Income Tax
1 Amendment of provisions relating to exemption from income tax.
1.—As respects the year of assessment 1993-94 and subsequent years of assessment, the Finance Act, 1980, is hereby amended—
(a) in section 1—
(i) by the substitution, in subsection (2) (inserted by the Finance Act, 1989), of “£7,200” and “£3,600”, respectively, for “£7,000” and “£3,500” (inserted by the Finance Act, 1992), and
(ii) by the substitution, in paragraph (a) (inserted by the Finance Act, 1991) of subsection (3) (inserted by the Finance Act, 1989), of “£350” for “£300” in both places where it occurs and of “£550” for “£500”,
and
(b) in section 2, by the substitution, in subsection (6) (inserted by the Finance Act, 1989)—
(i) of “£8,200” and “£9,400”, respectively, for “£8,000” and “£9,200” (inserted by the Finance Act, 1992), in paragraph (a), and
(ii) of “£4,100” and “£4,700”, respectively, for “£4,000” and “£4,600” (inserted by the Finance Act, 1992), in paragraph (b),
and the said subsection (2), and the said paragraph (a) of subsection (3), of the said section 1 and the said subsection (6) of the said section 2, as so amended, are set out in the Table to this section.
TABLE
(2) In this section “the specified amount” means, subject to subsection (3)—
(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in section 138 (a) of the Income Tax Act, 1967, £7,200, and
(b) in any other case, £3,600.
(a) For the purposes of this section and section 2, where a claimant proves that he has living, at any time during the year of assessment, any qualifying child, then, subject to subsection (4), the specified amount (within the meaning of this section or section 2, as the case may be) shall be increased, for that year of assessment, by £350 in respect of the first such child, £350 in respect of the second such child and £550 in respect of each such child in excess of two.
(6) In this section “the specified amount” means, subject to subsection (3) of section 1—
(a) in a case where the individual would, apart from this section, be entitled to a deduction specified in section 138 (a) of the Income Tax Act, 1967, £8,200:
Provided that, if at any time during the year of assessment either the individual or his spouse was of the age of seventy-five years or upwards, “the specified amount” means £9,400, and
(b) in any other case, £4,100:
Provided that, if at any time during the year of assessment the individual was of the age of seventy-five years or upwards, “the specified amount” means £4,700.
2 Alteration of rates of income tax.
2.—(1) Section 2 of the Finance Act, 1991, is hereby amended, as respects the year of assessment 1993-94 and subsequent years of assessment, by the substitution of the following Table for the Table to that section:
“TABLE
| Part of taxable income | Rate of tax | Description of rate |
|---|---|---|
| (1) | (2) | (3) |
| The first £7,675 | 27 per cent. | the standard rate |
| The remainder | 48 per cent. | the higher rate |
| Part of taxable income | Rate of tax | Description of rate |
| --- | --- | --- |
| (1) | (2) | (3) |
| The first £15,350 | 27 per cent. | the standard rate |
| The remainder | 48 per cent. | the higher rate |
”.
(2) Part I of the First Schedule shall have effect for the purpose of supplementing subsection (1).
3 Personal reliefs.
3.—(1) Where a deduction falls to be made from the total income of an individual for the year of assessment 1993-94 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this subsection and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2), be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).
TABLE
| Statutory provision | Amount to be deducted from total income for the year 1992-93 | Amount to be deducted from total income for the year 1993-94 and subsequent years |
|---|---|---|
| (1) | (2) | (3) |
| £ | £ | |
| Income Tax Act, 1967: | ||
| section 138 | ||
| (married man) | 4,200 | 4,350 |
| (widowed person bereaved in the year of assessment) | 4,200 | 4,350 |
| (widowed person) | 2,600 | 2,675 |
| (single person) | 2,100 | 2,175 |
| section 138A | ||
| (additional allowance for widows and others in respect of children) | ||
| (widowed person) | 1,600 | 1,675 |
| (others) | 2,100 | 2,175 |
(2) Section 3 of the Finance Act, 1991, shall have effect subject to the provisions of this section.
(3) Part II of the First Schedule shall have effect for the purpose of supplementing subsection (1).
4 Amendment of section 6 (special allowance in respect of P.R.S.I. for 1982-83) of Finance Act, 1982.
4.—Section 6 of the Finance Act, 1982, shall have effect for the purpose of ascertaining the amount of income on which an individual referred to therein is to be charged to income tax for the year 1993-94, as if in subsection (2)—
(a) “1993-94” were substituted for “1982-83”, and
(b) “£286” were substituted for “£312” in each place where it occurs.
5 Amendment of provisions relating to relief in respect of interest.
5.—(1) In this section “the principal sections” means sections 76 (1) and 496 of, and paragraph 1 (2) of Part III of Schedule 6 to, the Income Tax Act, 1967.
(2) Section 496 of the Income Tax Act, 1967, is hereby amended, as respects the year 1993-94 and subsequent years of assessment, by the substitution of the following subsection for subsection (2A) (inserted by the Finance Act, 1980):
“(2A) In relation to any interest paid in respect of any period beginning on or after the 6th day of April, 1993, and notwithstanding the provisions of subsection (1), no repayment of tax shall be made under this section for any year of assessment—
(a) in the case of a person who is assessed to tax for the year of assessment in accordance with the provisions of section 194, on the excess of the interest over £5,000,
(b) in the case of a widowed person, on the excess of the interest over £3,600, or
(c) in any other case, on the excess of the interest over £2,500.”.
(3) Section 7 of the Finance Act, 1989, shall not apply or have effect in relation to any interest paid in respect of any period beginning on or after the 6th day of April, 1993, and ending on or before the 5th day of April, 1994.
(4) As respects the year of assessment 1993-94 and subsequent years of assessment, section 6 of the Finance Act, 1987, shall not apply or have effect for the first three years of assessment for which relief falls to be given under the principal sections in respect of one or more than one qualifying loan (within the meaning of section 21 of the Finance Act, 1982):
Provided that for the purposes of calculating the additional relief, if any, which but for the enactment of this subsection would not have been given for a year of assessment, any relief given in accordance with the principal sections in the case of a person who has elected or could be deemed to have duly elected to be assessed to tax in accordance with the provisions of section 194 of the Income Tax Act, 1967, for any year of assessment shall, notwithstanding any other provision of the Tax Acts, be treated as given equally to the person and that person's spouse for such year of assessment notwithstanding that—
(a) section 197 of the Income Tax Act, 1967, may have applied for that year of assessment, and
(b) the payments in respect of which relief is given may not have been made in such proportions.
(5) In relation to any interest paid in respect of any period beginning on or after the 6th day of April, 1993, relief which falls to be granted under the principal sections shall, notwithstanding the foregoing provisions of this section, be reduced—
(a) in the case of a person who is assessed to tax for the year of assessment in accordance with the provisions of section 194 of the Income Tax Act, 1967, by £200 or, if less, the amount of interest paid, or
(b) in any other case, by £100 or, if less, the amount of interest paid.
6 Amendment of section 11 (restriction of relief to individuals on loans applied in acquiring shares in companies) of Finance Act, 1990.
6.—Section 11 of the Finance Act, 1990, is hereby amended by the substitution of the following section for section 11:
“11.—Notwithstanding the provisions of section 34 of the Finance Act, 1974, and section 8 of the Finance Act, 1978, relief shall not be given under the said section 34 or the said section 8 in respect of any payment of interest on any loan applied in acquiring shares issued—
(a) on or after the 20th day of April, 1990 (being shares forming part of the ordinary share capital of a company) if a claim for relief under Chapter III of Part I of the Finance Act, 1984, is made in respect of the amount subscribed for those shares, or
(b) on or after the 6th day of May, 1993 (being shares forming part of the ordinary share capital of a company) if a claim for relief under section 35 (as amended by the Finance Act, 1993) of the Finance Act, 1987, is made in respect of the amount subscribed for those shares.”.
7 Tax treatment of certain severance payments.
7.—(1) Section 115 of the Income Tax Act, 1967, is hereby amended by the insertion of the following subsection after subsection (1):
“(1A) (a) Paragraph (d) of subsection (1) shall not apply to the following payments, that is to say—
(i) a termination allowance payable in accordance with the provisions of section 5 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992, and any regulations made thereunder,
(ii) a severance allowance or a special allowance payable in accordance with the provisions of Part V (inserted by the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992) of the Ministerial and Parliamentary Offices Act, 1938, or
(iii) a special severance gratuity payable under section 7 of the Superannuation and Pensions Act, 1963, or any analogous payment payable under or by virtue of any other enactment.
(b) (i) Subparagraphs (i) and (ii) of paragraph (a) shall apply and have effect in relation to payments made on or after the 1st day of November, 1992.
(ii) Subparagraph (iii) of paragraph (a) shall apply and have effect in relation to payments made on or after the 6th day of May, 1993.”.
(2) (a) This subsection applies to the following payments, that is to say—
(i) a termination allowance (other than that part of the allowance which comprises a lump sum) payable in accordance with the provisions of section 5 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992, and any regulations made thereunder, and
(ii) a severance allowance or a special allowance payable in accordance with the provisions of Part V (inserted by the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992) of the Ministerial and Parliamentary Offices Act, 1938.
(b) Notwithstanding any other provision of the Income Tax Acts, payments to which this subsection applies, made on or after the 1st day of November, 1992, shall be deemed to be—
(i) profits or gains accruing from an office or employment and, accordingly—
(I) tax under Schedule E shall be charged thereon, and
(II) the tax so chargeable shall be computed under section 110 (1) (inserted by the Finance Act, 1991) of the Income Tax Act, 1967,
and
(ii) emoluments to which the provisions of Chapter IV of Part V of the Income Tax Act, 1967, are applied by section 125 of that Act.
8 Reliefs in respect of tax charged on payments on retirement, etc.
8.—As respects payments made on or after the 6th day of May, 1993, the Income Tax Act, 1967, is hereby amended—
(a) in section 115 (as amended by section 7)—
(i) by the substitution in subsection (3) (including the proviso thereto) of—
(I) “not exceeding the basic exemption” for “not exceeding £6,000”,
(II) “the amount of the said basic exemption” for “the said sum of £6,000”, and
(III) “the amount of the said basic exemption” for “the said sum”,
and
(ii) by the insertion of the following subsection after subsection (5):
“(5A) In this section and in Schedule 3 ‘the basic exemption’ means £6,000 together with £500 for each complete year of the service, up to the relevant date, of the holder in the office or employment in respect of which the payment is made.”,
and
(b) in Schedule 3—
(i) by the substitution in paragraph 3 of “the basic exemption” for “£6,000”,
(ii) by the substitution in subparagraph (b) of paragraph 4 of “one-fifteenth” for “one-twentieth”, and
(iii) by the substitution in the second proviso to paragraph 6 of “the basic exemption” for “£6,000” in both places where it occurs.
Chapter II Income Levy
9 Application of section 16 (income levy) of Finance Act, 1983, for 1993-94.
9.—(1) In this section “contribution year” means a year of assessment within the meaning of the Income Tax Acts.
(2) The provisions of section 16 (as amended by the Finance Act, 1984) of the Finance Act, 1983, shall apply and have effect for the contribution year 1993-94, as they applied and had effect for the contribution year 1984-85, as if—
(a) the following paragraph were substituted for paragraph (b) (inserted by the Finance Act, 1984) of subsection (2):
“(b) the Youth Employment Levy Regulations, 1982 (S.I. No. 84 of 1982), the Youth Employment Levy (Amendment) Regulations, 1983 (S.I. No. 52 of 1983), the Youth Employment Levy (Amendment) Regulations, 1984 (S.I. No. 75 of 1984), the Employment and Training Levy (Amendment) Regulations, 1988 (S.I. No. 53 of 1988), and the Employment and Training Levy (Amendment) Regulations, 1989 (S.I. No. 69 of 1989) (referred to in this subsection as ‘the Regulations’),”,
(b) the following paragraph were inserted after paragraph (i) of subsection (2):
“(ia) in section 16 of the Act, paragraphs (c) and (d) shall be deleted and the following paragraph shall be substituted for paragraph (a):
‘(a) where in a contribution year a payment is made to or for the benefit of the employed contributor in respect of reckonable earnings of that employed contributor, levy shall be payable by the employed contributor at the rate of 1 per cent, of the amount of the reckonable earnings to which such payment relates:
Provided that levy payable pursuant to this section shall not be payable by an employed contributor who, by virtue of section 45 of the Act of 1970, has full eligibility for services under Part IV of that Act,’.”,
(c) in paragraph (v) (inserted by the Finance Act, 1984) of subsection (2), “the year 1993-94” were substituted for “the year 1983-84 or the year 1984-85”,
(d) in the proviso (inserted by the Finance Act, 1984), “£173” and “£9,000” were substituted for “£96” and “£5,000”, respectively, and “1993-94” were substituted for “1984-85” in both places where it occurs, and
(e) the following additional proviso were inserted after the proviso (inserted by the Finance Act, 1984):
“Provided also that—
(a) where an individual proves to the satisfaction of the Revenue Commissioners that his reckonable income for the contribution year 1993-94 did not exceed £9,000 any levy deducted from emoluments forming part of that reckonable income shall be repaid to that individual and for the purposes of such repayment the levy shall be deemed to be income tax:
(b) where income levy is payable for the contribution year 1993-94 in respect of reckonable income other than emoluments, the provisions of section 18 (3) (b) (ii) of the Finance Act, 1988 (as applied for the purposes of income levy by virtue of Regulation 16 (inserted by the Employment and Training Levy (Amendment) Regulations, 1988) of the Youth Employment Levy Regulations, 1982), shall apply and have effect as if, in accordance with the provisions of this section, income levy had been payable for the contribution year 1992-93.”.
Chapter III Taxation of Married Persons
10 Taxation of married persons.
10.—(1) As respects the year of assessment 1994-95 and subsequent years of assessment, the Income Tax Act, 1967, is hereby amended, in Chapter I of Part IX, by the insertion of the following sections after section 195A (inserted by the Finance Act, 1983):
“Assessment on either spouse.
195B.—(1) In this section—
‘the basis year’, in relation to a husband and wife, means the year of marriage or, if earlier, the latest year of assessment preceding that year of marriage for which details of the total incomes of both the husband and the wife are available to the inspector at the time they first elect, or are first deemed to have duly elected, to be assessed to tax in accordance with the provisions of section 194;
‘year of marriage’ has the same meaning as it has in section 195A (inserted by the Finance Act, 1983).
(2) Subsection (3) shall apply for a year of assessment where, in the case of a husband and wife who are living together—
(a) (i) an election (including an election deemed to have been duly made) by the husband and wife to be assessed to tax in accordance with the provisions of section 194 has effect in relation to that year of assessment, and
(ii) the husband and the wife by notice in writing jointly given to the inspector before the 6th day of July in that year of assessment elect that the wife should be assessed to tax in accordance with the provisions of section 194,
or
(b) (i) the year of marriage is the year 1993-94 or a subsequent year of assessment, and
(ii) not having made an election under subsection (1) of section 195 to be assessed to tax in accordance with the provisions of section 194, the husband and wife have been deemed for that year of assessment, in accordance with the provisions of subsection (4) of the said section 195, to have duly made such an election, but have not made an election in accordance with the provisions of paragraph (a) (ii) for that year, and
(iii) the inspector, to the best of his knowledge and belief, considers that the total income of the wife for the basis year exceeded the total income of her husband for that basis year.
(3) Where this subsection applies for a year of assessment, the wife shall be assessed to tax in accordance with the provisions of section 194 for that year and, accordingly, references in section 194 or in any other provision of the Income Tax Acts, however expressed, to a husband being assessed, assessed and charged or chargeable to tax for a year of assessment in respect of his own total income (if any) and his wife's total income (if any) or to income of a wife being deemed for tax purposes to be that of her husband shall, subject to the provisions of this section and the modifications set out in subsection (6) and any other necessary modifications, be construed for that year of assessment as, respectively, references to a wife being assessed, assessed and charged or chargeable to tax in respect of her own total income (if any) and her husband's total income (if any) and to the income of a husband being deemed for tax purposes to be that of his wife.
(4) (a) Where, in accordance with subsection (3), a wife is, by virtue of subsection (2) (b), to be assessed and charged to tax in respect of her total income (if any) and her husband's total income (if any) for a year of assessment—
(i) in the absence of a notice given in accordance with the provisions of subsection (1) or (4) (a) of section 195 or an application made under section 197, the wife shall be so assessed and charged for each subsequent year of assessment, and
(ii) any such charge shall apply and continue to apply notwithstanding that her husband's total income for the basis year may have exceeded her total income for that year.
(b) Where a notice under section 195 (4) (a) or an application under section 197 is withdrawn and, but for the giving of such a notice or the making of such an application in the first instance, a wife would have been assessed to tax in respect of her own total income (if any) and the total income (if any) of her husband for the year of assessment in which the notice was given or the application was made, as may be appropriate, then, in the absence of an election made in accordance with the provisions of section 195 (1) (not being such an election deemed to have been duly made in accordance with the provisions of subsection (4) of that section), the wife shall be so assessed to tax for the year of assessment in which the aforesaid notice or application is withdrawn and for each subsequent year of assessment.
(5) Where an election is made in accordance with the provisions of paragraph (a) (ii) of subsection (2) for a year of assessment, the election shall have effect for that year and each subsequent year of assessment unless it is withdrawn by further notice in writing given jointly by the husband and the wife to the inspector before the 6th day of July in a year of assessment and the election shall not then have effect for the year for which the further notice is given or for any subsequent year of assessment.
(6) For the purposes of the other provisions of this section and as the circumstances may require—
(a) a reference in the Income Tax Acts, however expressed, to an individual or a claimant being a man, a married man or a husband shall be construed, respectively, as a reference to a woman, a married woman or a wife and a reference in those Acts, however expressed, to a woman, a married woman or a wife shall be construed, respectively, as a reference to a man, a married man or a husband, and
(b) any provision of the Income Tax Acts shall, in so far as it may relate to the treatment of any husband and wife for the purposes of those Acts, be construed so as to give effect to this section.
Repayment of tax in the case of certain husbands and wives.
195C.—(1) This section applies, for a year of assessment, in the case of a husband and wife, one of whom is assessed to tax for such year of assessment in accordance with the provisions of section 194 and to whom section 197 does not apply for such year.
(2) Where, for a year of assessment, this section applies in the case of a husband and wife, any repayment of tax which falls to be made in respect of the aggregate of the net tax deducted or paid under any provision of the Tax Acts (including a tax credit in respect of a distribution from a company resident in the State) in respect of the total income (if any) of the husband and of the total income (if any) of the wife shall be allocated to the husband and the wife concerned in proportion to the net amounts of tax so deducted or paid in respect of their respective total incomes:
Provided that this subsection shall not apply where a repayment, which but for the provisions of this subsection would not be made to a spouse, is less than £20.
(3) Notwithstanding the provisions of subsection (2), where the inspector, having regard to all the circumstances of a case, is satisfied that a repayment, or a greater part of a repayment, of tax arises by reason of some allowance or relief which, if the provisions of sections 197 and 198 had applied for the year of assessment, would have been allowed to one spouse only, he may make the repayment to the husband and the wife in such proportions as he considers just and reasonable.”.
Chapter IV Taxation of Savings and Investment
11 Amendment of Part III (special classes of companies) of Corporation Tax Act, 1976.
11.—Part III of the Corporation Tax Act, 1976, is hereby amended as follows, as respects accounting periods ending on or after the 1st day of February, 1993, for the purposes of paragraph (f), and as respects accounting periods ending on or after the 1st day of January, 1993, for the purposes of the other paragraphs of this section:
(a) in subsection (1A) (inserted by the Finance Act, 1986) of section 33—
(i) by the substitution for paragraphs (b) and (c) of the following paragraphs:
“(b) general annuity business,
(c) special investment business, and
(d) life assurance business (excluding such pension business, general annuity business and special investment business),”,
and
(ii) by the insertion after “class of business” of “as if it were the only business of the company”,
(b) in subsection (2) of section 33—
(i) by the insertion after “charged to tax” of “at the rate specified in section 1 (1) (b) (as amended by the Finance Act, 1990)”,
(ii) in paragraph (b), by the insertion after “concerns)” of “or 33B (2) (inserted by the Finance Act, 1993) or 88 (3)”, and
(iii) by the substitution for paragraph (c) of the following paragraphs—
“(c) relief for the management expenses, if any, attributable to the life business, other than special investment business, of a company shall be withheld before any relief for management expenses attributable to the special investment business of the company is withheld; and
(d) (i) sections 34 (2), 35 and 38 shall, and
(ii) the proviso (inserted by the Finance Act, 1993) to subsection (5) of section 16 shall not,
apply for the purposes of computing the profits of the life assurance business or the industrial assurance business, as the case may be, which would have been charged to tax under Case I of Schedule D.”,
(c) by the insertion after section 33A (inserted by the Finance Act, 1992) of the following section:
“Distributions received from Irish resident companies.
33B.—(1) Sections 2 and 83 (4) (as amended by section 38 of the Finance Act, 1992) shall not have effect as respects a distribution received by an assurance company, in connection with that part of its life business the profits of which are charged to corporation tax otherwise than under Case I or Case IV of Schedule D; and the income represented by the distribution shall be equal to the aggregate of the amount of the distribution and the amount of the tax credit in respect of the distribution.
(2) Where an assurance company is entitled to a tax credit in respect of a distribution which is chargeable, by virtue of subsection (1), to corporation tax—
(a) it may, subject to the provisions of section 45 (5), set the credit against the corporation tax, as reduced by virtue of sections 36 (2) and 36A (6) or by either of those sections, chargeable on its profits for the accounting period in which the distribution is made and, where the credit exceeds that corporation tax, the excess shall be paid to it, and
(b) notwithstanding the provisions of sections 24 and 155, the income represented by the distribution shall not be franked investment income for the purposes of sections 15 and 25.”,
(d) by the insertion after section 35 of the following section:
“Chargeable gains of life business.
35A.—(1) For the purpose of computing corporation tax on chargeable gains accruing to a fund or funds maintained by an assurance company in respect of its life business—
(a) (i) section 3 of the Capital Gains Tax (Amendment) Act, 1978, and
(ii) section 19 of the Capital Gains Tax Act, 1975, as it applies to assets specified in that section or in any other provision of the Capital Gains Tax Acts,
shall not have effect, and
(b) paragraph 14 of Schedule 1 to the Capital Gains Tax Act, 1975, shall, as respects—
(i) subparagraphs (1) and (2), and
(ii) subparagraph (3), in so far as a chargeable gain is not thereby disregarded for the purposes of that subparagraph,
apply as if section 12 of the Finance Act, 1993, subsection (8) (a) of section 36A (inserted by that Act), section 46A (as amended by that Act) and paragraph (a) (ii) had not been enacted.
(2) Subject to section 46B, where an assurance company, in the course of carrying on a class of life assurance business mentioned in paragraph (c) or (d) of section 33 (1A) (inserted by the Finance Act, 1986, and as amended by the Finance Act, 1993) disposes of, or is deemed to dispose of, assets in an accounting period, the amount, if any, for each such class of business by which the aggregate of allowable losses exceeds the aggregate of chargeable gains on the disposals or deemed disposals in the course of that class of business in the accounting period shall be—
(a) disregarded for the purposes of section 5 (1) of the Capital Gains Tax Act, 1975, and
(b) treated, for the purposes of this Act, as a sum disbursed by the company in the accounting period as an expense of management, other than an acquisition expense (within the meaning of section 33A (inserted by the Finance Act, 1992)), incurred in the course of carrying on that class of business.
(3) For the purposes of subsection (2), any amount which, apart from section 12 of the Finance Act, 1993, would be treated as a chargeable gain or an allowable loss of an accounting period of a company by virtue of section 46B shall also be treated as arising on a disposal of assets by the company in the accounting period so that each such amount shall be taken into account in determining the amount, if any, by which the aggregate of allowable losses exceeds the aggregate of chargeable gains on disposals of assets by the company in the course of carrying on life assurance business (excluding pension business, general annuity business and special investment business) in the said period.”,
(e) in section 36—
(i) by the substitution for subsections (1) to (3) of the following subsections:
“(1) A claim may be made under this section by an assurance company in respect of unrelieved profits from investments referable to life business, other than special investment business, carried on by the company.
(2) For any financial year for which the rate of corporation tax exceeds the standard rate of income tax for the year of assessment in which that year ends, the corporation tax in respect of any of the said unrelieved profits of the company for that year shall be reduced, on a claim in that regard being made by the company, by so much of that tax as is equal to the amount by which—
(a) the corporation tax chargeable on the company for that year in respect of the part specified in subsection (5) of the said unrelieved profits,
exceeds—
(b) the corporation tax which would be so chargeable in respect of that part of those profits if the rate of corporation tax for that year were equal to the standard rate of income tax for the said year of assessment.
(3) For the purposes of this section—
(a) ‘unrelieved profits’ means the amount of profits on which corporation tax falls finally to be borne;
(b) the amount of tax which is or would be chargeable on a company shall be taken to be the amount of tax which is or would be so chargeable after allowance of any relief to which the company is or would be entitled otherwise than under the provisions of this section or section 33B (2) (inserted by the Finance Act, 1993), 46 or 88.”,
and
(ii) in subsection (5), by the substitution for “unrelieved income” in each place where it occurs in paragraph (a) of “unrelieved profits”,
(f) by the insertion after section 36 of the following sections—
“Special investment policies.
36A.—(1) In this section—
‘excluded shares’ means—
(a) shares in an investment company within the meaning of Part XIII of the Companies Act, 1990,
(b) shares in an undertaking for collective investment in transferable securities within the meaning of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 1989 (S.I. No. 78 of 1989), or
(c) shares in a company being shares the market value of which may be expected to approximate at all times to the market value of the proportion of the assets of the company which they represent;
‘inspector’, in relation to any matter, means an inspector of taxes appointed under section 161 of the Income Tax Act, 1967, and includes such other officers as the Revenue Commissioners shall appoint in that behalf;
‘mortality cover’ means any amount payable under a policy of life assurance in the event of the death of a person specified in the terms of that policy;
‘ordinary shares’ means shares forming part of a company's ordinary share capital;
‘qualifying shares’ means ordinary shares—
(a) in a company which is resident in the State, or
(b) (i) which are listed in the official list of the Irish Stock Exchange, or
(ii) dealt in on the smaller companies market, or the unlisted securities market, of the Irish Stock Exchange,
other than excluded shares;
‘special investment business’ means so much of the life business of an assurance company as is connected with special investment policies;
‘special investment fund’ means a fund in respect of which the conditions specified in subsection (2) are satisfied;
‘special investment policy’ means a policy of life assurance, issued by an assurance company to an individual on or after the 1st day of February, 1993, in respect of which—
(a) the conditions specified in subsection (3) are satisfied, and
(b) a declaration of the kind specified in subsection (4) has been made to the assurance company;
‘specified qualifying shares’, in relation to a special investment fund, means qualifying shares in a company the issued share capital of which has a market value of less than £100,000,000 when the shares are acquired for the fund.
(2) The conditions referred to in the definition of ‘special investment fund’ in subsection (1) are as follows:
(a) the fund shall be owned by an assurance company;
(b) the fund shall be kept separately from its other funds, if any, by the assurance company;
(c) the fund shall represent, and represent only, the liabilities of the assurance company in respect of its special investment business, and, accordingly, there shall not be any arrangements whereby any asset of the fund is connected, directly or indirectly, with any business of the company other than its special investment business;
(d) the aggregate of the consideration given for shares which are, at any time before the 1st day of February, 1994, assets of the fund shall not be less than—
(i) as respects qualifying shares, 40 per cent., and
(ii) as respects specified qualifying shares, 6 per cent., of the aggregate of the consideration given for the assets which are assets of the fund at that time;
(e) the aggregate of the consideration given for shares which are, at any time within the year ending on the 31st day of January, 1995, assets of the fund shall not be less than—
(i) as respects qualifying shares, 45 per cent., and
(ii) as respects specified qualifying shares, 9 per cent.,
of the aggregate of the consideration given for the assets which are assets of the fund at that time;
(f) the aggregate of the consideration given for shares which are, at any time within the year ending on the 31st day of January, 1996, assets of the fund shall not be less than—
(i) as respects qualifying shares, 50 per cent., and
(ii) as respects specified qualifying shares, 12 per cent.,
of the aggregate of the consideration given for the assets which are assets of the fund at that time;
(g) the aggregate of the consideration given for shares which are, at any time on or after the 1st day of February, 1996, assets of the fund shall not be less than—
(i) as respects qualifying shares, 55 per cent., and
(ii) as respects specified qualifying shares, 15 per cent.,
of the aggregate of the consideration given for the assets which are assets of the fund at that time,
and, for the purposes of paragraphs (d) to (g), the amount of the consideration given for assets of the fund shall be determined in accordance with section 36B (inserted by the Finance Act, 1993), section 9 of the Capital Gains Tax Act, 1975, and paragraph 4 of Schedule 1 to the Capital Gains Tax (Amendment) Act, 1978.
(3) The conditions referred to in the definition of a ‘special investment policy’ are as follows:
(a) the policy of life assurance concerned shall be designated by the assurance company concerned as a special investment policy;
(b) any payments received by the company in respect of the policy shall not, or shall not in aggregate if there is more than one such payment, exceed £50,000;
(c) the company shall ensure that its liability in respect of the policy does not exceed £50,000 at any time on or after the fifth anniversary of the date on which the first payment was received by it in respect of the policy;
(d) the policy shall not be issued to or owned by an individual who is not of full age;
(e) the policy shall be issued to an individual—
(i) who is beneficially entitled to, and
(ii) to whom there shall be paid,
all amounts, other than mortality cover, payable under the policy by the company;
(f) except in the case of a policy issued to and owned jointly by, and only by, a couple married to each other, the policy shall not be a joint policy;
(g) unless the policy is issued to and owned jointly by, and only by, a couple married to each other, the policy shall be the only such policy owned by the individual;
(h) if the policy is to be issued to and owned jointly by, and only by, a couple married to each other, it shall be the only such policy, or one of two only such policies owned by them and only by them,
and, for the purposes of paragraphs (d) to (h), references to ownership of a policy shall be construed as references to beneficial ownership of the policy.
(4) The declaration referred to in paragraph (b) of the definition of ‘special investment policy’ in subsection (1) is a declaration in writing to an assurance company which—
(a) (i) is made by the individual (hereafter in this section referred to as ‘the declarer’) to whom any amounts, other than mortality cover, are payable by the assurance company in respect of the policy in respect of which the declaration is made, and
(ii) is signed by the declarer,
(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,
(c) declares that at the time when the declaration is made the conditions referred to in paragraphs (d) to (h) of subsection (3) are satisfied in relation to the policy in respect of which the declaration is made,
(d) contains the full name and address of the individual beneficially entitled to any amounts, other than mortality cover, payable in respect of the policy in respect of which the declaration is made,
(e) contains an undertaking by the declarer that if any of the conditions specified in paragraphs (d) to (h) of subsection (3) cease to be satisfied in respect of the policy in respect of which the declaration is made, the declarer will notify the assurance company accordingly, and
(f) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this section.
(5) (a) An assurance company shall—
(i) keep and retain for not less than the longer of the following periods, that is to say:
(I) a period of 6 years, and
(II) a period which, in relation to the policy in respect of which the declaration is made, ends not earlier than 3 years after the date on which the company ceases to have any liability in respect of the policy, and
(ii) on being so required by notice given to it in writing by an inspector, make available to the inspector, within the time specified in the notice,
all declarations of the kind specified in subsection (4) which have been made to it.
(b) The inspector may examine and take copies of, or of extracts from, a declaration made available to him under paragraph (a).
(6) The corporation tax which is chargeable on any profits on which corporation tax falls finally to be borne which are attributable to the special investment fund of an assurance company shall be reduced, for all the purposes of the Tax Acts other than subsection (2) (as amended by the Finance Act, 1993) of section 33, so that, before it is reduced by any credit, relief or other deduction under the Tax Acts apart from this section, it is 10 per cent. of those profits.
(7) (a) For the purposes of this Act, any deduction from the profits of an assurance company, being profits of more than one class of life assurance business referred to in section 33 (1A) (as amended by the Finance Act, 1993), shall be treated as reducing the amount of the profits of each such class of business by an amount which bears the same proportion to the amount of the deduction as the amount of the profits of that class of business, before any deduction, bears to the amount of the profits of the company brought into charge to corporation tax.
(b) In paragraph (a) ‘deduction’ means any deduction, relief or set-off which may be treated for the purposes of corporation tax as reducing profits of more than one description.
(8) For the purposes of computing income arising from, or chargeable gains accruing from the disposal of, assets of the special investment fund of an assurance company—
(a) each asset of the fund on the day on which an accounting period of the company ends shall be deemed to have been disposed of and immediately reacquired at the asset's market value on the said day;
(b) without prejudice to the treatment of losses on such shares as allowable losses, gains accruing on the disposal or deemed disposal of eligible shares, within the meaning of Chapter III of Part I of the Finance Act, 1984, in qualifying companies, within the meaning aforesaid, shall not be chargeable gains;
(c) section 33B (inserted by the Finance Act, 1993) shall not apply to distributions in respect of the shares mentioned in paragraph (b); and
(d) section 43 shall not have effect.
Transfer of assets.
36B.—Where an assurance company transfers the whole or part of an asset (any interest in or rights over an asset being regarded for the purposes of this section as part of the asset)—
(a) which it owned prior to the transfer or which was created by the transfer, into, or
(b) which it owns after the transfer, out of, its special investment fund, the company shall be deemed to have disposed of and immediately reacquired the asset or part, as the case may be, at the market value of the asset or part, as the case may be, at the time of the transfer.
Special investment policies: breach of conditions.
36C.—(1) For the purposes of this section, a policy of life assurance held by an individual, whether married or not, shall not be a special investment policy at any particular time if—
(a) as respects the policy—
(i) a declaration of the kind specified in subsection (4) of section 36A has not been made, or
(ii) any of the conditions referred to in subsection (3) of section 36A is not satisfied,
at that time, or
(b) as respects the individual, he has at that time a beneficial interest prohibited by section 16 of the Finance Act, 1993, in classes of investment mentioned in paragraphs (a), (b), (c) and (d) of subsection (1) of that section.
(2) Where an assurance company becomes aware at any time that a policy of life assurance which it has treated as a special investment policy is not such a policy—
(a) it shall ensure that, in accordance with section 36A (2) (c), its special investment fund does not, after that time, represent its liability in respect of the policy, and
(b) for all the purposes of the Tax Acts, other than section 18 (3) of the Finance Act, 1988, the liability to corporation tax of the company for the accounting period, in which it became aware that the policy was not a special investment policy, shall be increased by an amount determined by the formula—
| A B | 10 ___ 9 | S 10 _____ 100 | ||||
|---|---|---|---|---|---|---|
where—
A is the amount which was the assumed liability, other than the liability, if any, in respect of mortality cover, of the company in respect of the policy immediately before it became aware that the policy was not a special investment policy,
B is—
(i) the amount which was the liability other than the liability, if any, in respect of mortality cover, of the company in respect of the policy when the policy ceased to be a special investment policy,
or
(ii) if the policy was never a special investment policy, the amount of the aggregate of the payments received, and not repaid, by the company in respect of the policy,
and
S is the standard rate per cent. for the year of assessment in which the said accounting period ends.”,
(g) in section 38—
(i) by the substitution for “33,36 and 37” of “33 and 36”, and
(ii) by the insertion of the following proviso to the section—
“Provided that the corporation tax which would have been paid by the company if it had been charged to tax in respect of its life business under Case I of Schedule D shall be computed, for the purposes of section 33, as if so much of the trading income of the company in respect of its life business as does not exceed the franked investment income attributable, by reference to section 36 (4), to the shareholders of the company were charged to corporation tax, notwithstanding section 1, at a rate per cent. determined by the formula—
| A __ B | 100 | ||
|---|---|---|---|
where—
A is the aggregate amount of the tax credits comprised in the franked investment income received in the accounting period concerned by the company in connection with its life business, and
B is the aggregate amount of that franked investment income.”,
(h) in section 43—
(i) in subsections (1) and (3), by the substitution for “and general annuity fund” of “, general annuity fund and special investment fund”, and
(ii) in subsection (3), by the substitution for “liabilities in respect of general annuity and” of “liabilities in respect of special investment, general annuity or”,
(i) by the substitution for section 46 of the following section—
“Overseas life assurance companies: tax credit in respect of distributions.
46.—Where an overseas life assurance company—
(a) receives a distribution from a company resident in the State, and
(b) is not entitled to, or disclaims, by notice in writing to the appropriate inspector, within the meaning of section 9 (1) of the Finance Act, 1988, relief in respect of the distribution under—
(i) the Convention set out in Schedule 8 to the Income Tax Act, 1967, or
(ii) arrangements made under section 361 (agreements for relief from double taxation of income) of the Income Tax Act, 1967,
as applied for corporation tax,
then, it shall be deemed to be entitled to such a tax credit in respect of the distribution as it would be entitled to if it were a company resident in the State; and, accordingly the income represented by the distribution shall be the aggregate of the distribution and the tax credit.”,
(j) in section 46A (inserted by the Finance Act, 1992)—
(i) in subsection (1), by the deletion of the definitions of “collective investment undertaking”, “life business fund”, “market value”, “trading company” and “units” and the insertion of the following definitions:
“‘life business fund’ means the fund or funds maintained by an assurance company in respect of its life business other than its special investment business;”,
“‘linked liabilities’ means liabilities in respect of benefits to be determined by reference to the value of linked assets;”,
(ii) by the substitution for subsections (2) and (3) of the following subsections:
“(2) Each asset of the life business fund of an assurance company on the day on which an accounting period of the company ends shall, subject to the subsequent provisions of this section, be deemed to have been disposed of and immediately reacquired by the company on that day at the asset's market value on the said day.
(3) Subsection (2) shall not apply to—
(a) (i) assets specified in section 19 of the Capital Gains Tax Act, 1975, or
(ii) assets to which the said section 19 is applied by any provision of the Capital Gains Tax Acts,
(b) assets linked solely to pension business or special investment business, or
(c) assets of the foreign life assurance fund,
and, in relation to other assets which are not assets linked solely to life assurance business (excluding pension business, general annuity business and special investment business), shall apply only to the relevant chargeable fraction for an accounting period of each class of asset:
Provided that, for the purposes of this section, in applying paragraph 6 of Part I of Schedule 1 to the Capital Gains Tax Act, 1975, to the computation of gains accruing to an assurance company on the disposal, on the day on which an accounting period of the company ends, of assets which are not linked solely to life assurance business (excluding pension business, general annuity business or special investment business), the company shall be deemed to have acquired all of the assets of its life business fund, other than the assets it acquired in that accounting period, at their respective market values on the day immediately before the day on which that period began.”,
(iii) in subsection (4) (a) (i), by the substitution for “(excluding pension business and general annuity business)” of “(excluding pension business, general annuity business and special investment business), special investment business”,
(iv) in subsections (4) (b) (i) (I) and (5) (a), by the insertion after “foreign life assurance business” of “or special investment business”,
and
(v) by the substitution for subsections (6) and (7) of the following subsection:
“(6) For the purposes of this section assets of the foreign life assurance fund or special investment fund and liabilities of the foreign life assurance business or special investment business shall be left out of account in determining the investment reserve.”,
(k) in section 50—
(i) by the substitution for subsection (1) of the following subsection:
“(1) This section has effect for the interpretation of sections 33 to 49, including sections 46A and 46B (inserted by the Finance Act, 1992) and sections 33B, 35A, 36A, 36B and 36C (inserted by the Finance Act, 1993), and this section.”,
and
(ii) in subsection (2), by the insertion of the following definitions:
“‘market value’ has the meaning assigned to it by section 49 of the Capital Gains Tax Act, 1975;”,
“‘special investment business’, ‘special investment fund’ and ‘special investment policy’ have the meanings assigned to them by section 36A;”,
and the said—
(A) subsection (1A) (other than the proviso thereto) and subsection (2) of section 33,
(B) paragraph (a) of subsection (5) of section 36,
(C) subsections (1) and (3) of section 43, and
(D) subparagraph (i) of paragraph (a), and clause (I) of subparagraph (i) of paragraph (b), of subsection (4), and paragraph (a) of subsection (5), of section 46A,
as so amended, are set out in the Table to this section.
TABLE
(1A) Where the life assurance business of an assurance company includes more than one of the following classes of business, that is to say:
(a) pension business,
(b) general annuity business,
(c) special investment business, and
(d) life assurance business (excluding such pension business, general annuity business and special investment business),
then, for the purposes of this Act, the business of each such class shall be treated as though it were a separate business and subsection (1) shall apply separately to each such class of business as if it were the only business of the company:
(2) Relief under subsection (1) shall not be given to any such company, so far as it would, if given in addition to all other reliefs to which the company is entitled, reduce the corporation tax borne by the company on the income and gains of its life business for any accounting period to less than would have been paid if the company had been charged to tax at the rate specified in section 1 (1) (b) (as amended by the Finance Act, 1990) in respect of that business under Case I of Schedule D; and where relief has been withheld in respect of any accounting period by virtue of this subsection, the excess to be carried forward by virtue of section 15 (2) shall be increased accordingly.
For the purposes of this subsection—
(a) any tax credit to which the company is entitled in respect of a distribution received by it shall be treated as an equivalent amount of corporation tax borne or paid in respect of that distribution; and
(b) any payment in respect of that credit under section 15 (4), 25 (set-off of losses etc. against franked investment income), 26 (set-off of loss brought forward or terminal loss against franked investment income of financial concerns), 33B(2) (inserted by the Finance Act, 1993) or 88 (3) shall be treated as reducing the tax so treated as borne or paid; and
(c) relief for the management expenses, if any, attributable to the life business, other than special investment business of a company shall be withheld before any relief for management expenses attributable to the special investment business of the company is withheld; and
(d) (i) sections 34 (2), 35 and 38 shall, and
(ii) the proviso (inserted by the Finance Act, 1993) to subsection (5) of section 16 shall not,
apply for the purposes of computing the profits of the life assurance business or the industrial assurance business, as the case may be, which would have been charged to tax under Case I of Schedule D.
The reference in paragraph 2 (1) of Schedule 1 to the Capital Gains Tax Act, 1975 (exclusion from consideration for disposal of sums chargeable to income tax), to computing income or profits or gains or losses shall not be taken as applying to a computation of a company's income for the purposes of this subsection.
(5) (a) Where the aggregate of the said unrelieved profits and the shareholders' part of the franked investment income exceeds the profits of the company in respect of its life business for the relevant accounting periods computed in accordance with the provisions of Case I of Schedule D as extended by sections 35 and 38 (whether or not the company is charged to tax under that Case) the said part shall be the amount of that excess or the unrelieved profits whichever is the less, and
(1) Any income of an overseas life assurance company from the investments of its life assurance fund (excluding the pension fund, general annuity fund and special investment fund, if any), wherever received, shall, to the extent provided in this section, be deemed to be profits comprised in Schedule D and shall be charged to corporation tax under Case III of Schedule D.
(3) A portion only of the income from the investments of the life assurance fund (excluding the pension fund, general annuity fund and special investment fund, if any) shall be charged in accordance with subsection (1), and for any accounting period that portion shall be determined by the formula—
| A B ______ C |
|---|
where—
A is the total income from those investments for that period,
B is the average of the liabilities for that period to policy holders resident in the State and to policy holders resident outside the State whose proposals were made to the company at or through its branch or agency in the State, and
C is the average of the liabilities for that period to all the company's policy holders,
but any reference in this subsection to liabilities does not include liabilities in respect of special investment, general annuity or pension business.
(i) the denominator is the average of such of the opening and closing life business liabilities as are liabilities in respect of benefits to be determined by reference to the value of linked assets, other than assets linked solely to life assurance business (excluding pension business, general annuity business and special investment business), special investment business or pension business and assets of the foreign life assurance fund, and
(I) the average of the opening and closing life business liabilities, other than liabilities in respect of benefits to be determined by reference to the value of linked assets and liabilities of the foreign life assurance business or special investment business, and
(5) (a) In this subsection “liabilities” does not include the liabilities of the foreign life assurance business or special investment business.
12 Life assurance companies: transitional provisions.
12.—(1) For the purposes of computing the liability of an assurance company to corporation tax in respect of its life business, where an accounting period of the company begins before the 1st day of January, 1993, and ends on or after that day, it shall be divided into two parts, one beginning on the day on which the accounting period begins and ending on the 31st day of December, 1992, and the other beginning on the 1st day of January, 1993, and ending on the day on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods of the company.
(2) (a) Notwithstanding section 11 and subject to paragraph (b), sections 46A and 46B (inserted by the Finance Act, 1992, and as amended by section 11) of the Corporation Tax Act, 1976, shall also apply as respects an assurance company's accounting period ending on the 31st day of December, 1992:
Provided that, in computing the chargeable gain on a disposal which is deemed to have been made by virtue of this paragraph—
(i) subsection (1) of section 3 of the Capital Gains Tax (Amendment) Act, 1978, shall apply as if, in subsection (3) of that section, paragraph (b) were deleted, and
(ii) if the disposal would not have been deemed to have been made apart from this paragraph, the said section 46A shall apply to that disposal as if the proviso to subsection (3) were deleted.
(b) Notwithstanding section 36 (as amended by section 11) of the Corporation Tax Act, 1976, where chargeable gains and allowable losses accrue on disposals, deemed by virtue of the said section 46A, as applied by paragraph (a), to have been made by a life assurance company, the amount of any fraction of the difference between the aggregate of such chargeable gains and the aggregate of such allowable losses which is treated by virtue of the said section 46B as a chargeable gain of an accounting period ending on or after the 1st day of January, 1993, shall be deducted from the amount of the unrelieved profits (within the meaning of the said section 36) of the accounting period for the purposes of computing the relief due to the company under the said section 36.
13 Special investment schemes.
13.—(1) (a) In this section “inspector”, “ordinary shares”, and “qualifying shares” have the meanings assigned to them by section 36A (inserted by this Act) of the Corporation Tax Act, 1976;
“authorised unit trust scheme” means a unit trust scheme which is, or is deemed to be, an authorised unit trust scheme within the meaning of the Unit Trusts Act, 1990, and which has not had its authorisation under that Act revoked;
“market value” has the meaning assigned to it by section 49 of the Capital Gains Tax Act, 1975;
“special investment scheme” means an authorised unit trust scheme in respect of which the conditions specified in subsection (2) are satisfied;
“special investment units” means units, sold to an individual on or after the 1st day of February, 1993, by the management company or trustee under an authorised unit trust scheme, in respect of which—
(a) the conditions specified in subsection (3) are satisfied, and
(b) a declaration of the kind specified in subsection (4) has been made to the management company or trustee;
“specified qualifying shares”, in relation to a special investment scheme, means qualifying shares in a company which, when the shares are acquired for the scheme, has an issued share capital the market value of which is less than £100,000,000;
“units”, in relation to an authorised unit trust scheme, means any units (whether described as units or otherwise) into which are divided the beneficial interests in the assets subject to any trust created under the scheme.
(b) A reference in this section to the management company or trustee under an authorised unit trust scheme shall be construed as a reference to the person in whom are vested the powers of management relating to property for the time being subject to any trust created in pursuance of the scheme or, as the case may be, to the person in whom such property is or may be vested in accordance with the terms of the trust.
(2) The conditions referred to in the definition of “special investment scheme” in subsection (1) are as follows:
(a) the beneficial interests in the assets subject to any trust created under the authorised unit trust scheme concerned shall be divided into special investment units;
(b) the aggregate of the consideration given for shares which are, at any time before the 1st day of February, 1994, assets subject to any trust created under the scheme shall not be less than—
(i) as respects qualifying shares, 40 per cent., and
(ii) as respects specified qualifying shares, 6 per cent.,
of the aggregate of the consideration given for the assets which are at that time subject to any such trust;
(c) the aggregate of the consideration given for shares which are, at any time within the year ending on the 31st day of January, 1995, assets subject to any trust created under the scheme shall not be less than—
(i) as respects qualifying shares, 45 per cent., and
(ii) as respects specified qualifying shares, 9 per cent.,
of the aggregate of the consideration given for the assets which are at that time subject to any such trust;
(d) the aggregate of the consideration given for shares which are, at any time within the year ending on the 31st day of January, 1996, assets subject to any trust created under the scheme shall not be less than—
(i) as respects qualifying shares, 50 per cent., and
(ii) as respects specified qualifying shares, 12 per cent.,
of the aggregate of the consideration given for the assets which are at that time subject to any such trust;
(e) the aggregate of the consideration given for shares which are, at any time on or after the 1st day of February, 1996, assets subject to any trust created under the scheme shall not be less than—
(i) as respects qualifying shares, 55 per cent., and
(ii) as respects specified qualifying shares, 15 per cent.,
of the aggregate of the consideration given for the assets which are at that time subject to any such trust;
and, for the purposes of paragraphs (b) to (e), the amount of the consideration given for assets subject to any trust created under the scheme shall be determined in accordance with the provisions of section 9 of the Capital Gains Tax Act, 1975, and paragraph 4 of Schedule 1 to the Capital Gains Tax (Amendment) Act, 1978.
(3) The conditions referred to in the definition of “special investment units” in subsection (1) are as follows:
(a) the special investment units shall be so designated in the trusts created under the authorised unit trust scheme concerned;
(b) the aggregate of payments made on or before any day to the management company or trustee under the scheme by or on behalf of an individual, in respect of special investment units owned, whether jointly or otherwise, by the individual on that day, shall not exceed £50,000;
(c) the management company or trustee under the scheme shall ensure that the aggregate of the market value of special investment units owned, whether jointly or otherwise, by any individual does not exceed £50,000 at any time on or after the fifth anniversary of the date on which the first payment was made by or on behalf of that individual in respect of those units;
(d) special investment units shall not be sold to or owned by an individual who is not of full age;
(e) special investment units shall only be sold to an individual—
(i) who shall be beneficially entitled to, and
(ii) to whom there shall be paid,
all amounts payable in respect of those units by the management company or trustee under the scheme;
(f) except in the case of special investment units sold to and owned jointly by, and only by, a couple married to each other, units shall not be jointly owned;
(g) except in the case of special investment units bought by and owned jointly by, and only by, a couple married to each other, an individual who owns such units of an authorised unit trust scheme shall not buy or own such units of another authorised unit trust scheme;
(h) where a couple married to each other buy and jointly own special investment units of an authorised unit trust scheme, they shall not buy or own such units in any other such scheme either individually or jointly, other than units which they buy and jointly own in one other such scheme,
and—
(i) for the purposes of paragraphs (b) to (d) and (f) to (h), references to ownership of special investment units shall be construed as references to beneficial ownership of the units, and
(ii) for the purposes of paragraphs (b) and (c), a disposal of special investment units of an authorised unit trust scheme, acquired by an individual at different times, shall be assumed to be a disposal of units acquired later, rather than of units acquired earlier, by him.
(4) The declaration referred to in the definition of “special investment units” in subsection (1) is a declaration in writing to the management company or trustee under an authorised unit trust scheme which—
(a) (i) is made by the individual (hereafter in this section referred to as “the declarer”) to whom any amounts are payable by the management company or trustee in respect of units in respect of which the declaration is made, and
(ii) is signed by the declarer,
(b) is made in such form as may be prescribed or authorised by the Revenue Commissioners,
(c) declares that at the time when the declaration is made the conditions specified in paragraphs (d) to (h) of subsection (3) are satisfied in relation to the units in respect of which the declaration is made,
(d) contains the full name and address of the individual beneficially entitled to any amounts payable in respect of the units in respect of which the declaration is made,
(e) contains an undertaking by the declarer that if any of the conditions referred to in paragraphs (d) to (h) of subsection (3) ceases to be satisfied in respect of the units in respect of which the declaration is made, the declarer will notify the management company or trustee accordingly, and
(f) contains such other information as the Revenue Commissioners may reasonably require for the purposes of this section.
(5) (a) The management company or trustee under an authorised unit trust scheme shall—
(i) keep and retain for not less than the longer of the following periods, that is to say:
(I) a period of 6 years, and
(II) a period which, in relation to the units in respect of which the declaration is made, ends 3 years after the earliest date on which all of those units stand cancelled, redeemed or bought by the said management company or trustee, and
(ii) on being so required by notice given to it in writing by an inspector, make available to the inspector, within the time specified in the notice,
all declarations of the kind specified in subsection (4) which have been made to it.
(b) The inspector may examine and take copies of, or of extracts from, a declaration made available to him under paragraph (a).
(6) (a) Notwithstanding section 18 of the Finance Act, 1989, a special investment scheme shall not be a collective investment undertaking for the purposes of that section and the First Schedule to that Act:
Provided that a special investment scheme shall continue to be treated as a collective investment undertaking within the meaning of the said section 18 for the purposes of—
(i) paragraph (i) (gg) of the First Schedule to the Value-Added Tax Act, 1972, and
(ii) section 206 (a) of the Finance Act, 1992.
(b) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts—
(i) income tax shall be chargeable at the standard rate in respect of income arising to a special investment scheme, and such income shall not be charged to an additional duty of income tax under section 13 of the Finance Act, 1976, and
(ii) capital gains tax shall be chargeable at the rate specified in section 3 (3) of the Capital Gains Tax Act, 1975, in respect of chargeable gains accruing to a special investment scheme:
Provided that—
(I) any income tax or capital gains tax so chargeable shall be reduced so that the amount of such tax, before it is reduced by any credit, relief or other deduction under the Tax Acts or the Capital Gains Tax Acts apart from this section, is 10 per cent of income arising or chargeable gains accruing, as the case may be, to the scheme, and
(II) only so much of income arising or gains accruing to the scheme shall be chargeable to income tax or capital gains tax, as the case may be, as is, or is to be—
(A) paid to, or
(B) accumulated or invested for the benefit of,
holders of special investment units or as would be so paid, accumulated or invested if any gains accruing to the scheme by virtue of subsection (8) were gains on an actual disposal of the assets concerned.
(7) (a) Notwithstanding subsection (5) of section 88 of the Corporation Tax Act, 1976, a distribution made by a company resident in the State in respect of shares which are subject to any trust created in pursuance of a special investment scheme shall be treated for the purposes of the Tax Acts as income in respect of which the management company or trustee under the scheme is entitled to a tax credit and no other person shall fall to be treated for the purposes of the said section 88 as receiving that distribution.
(b) Where a management company or trustee under a special investment scheme is entitled to a tax credit in respect of a distribution made by a company resident in the State, the credit, or part of it, shall be set against—
(i) the income tax, as reduced by virtue of the proviso to subsection (6) (b), chargeable in respect of income arising to, or
(ii) the capital gains tax, as so reduced, chargeable in respect of chargeable gains accruing to,
the special investment scheme for the year of assessment in which the distribution is made and, where the credit exceeds the aggregate of that income tax and capital gains tax, the excess shall be paid to the management company or trustee under the scheme.
(c) Notwithstanding any provision of that Chapter, Chapter IV of Part I of the Finance Act, 1986, shall apply to a deposit, within the meaning of the Chapter, for the time being subject to any trust created in pursuance of a special investment scheme as if such a deposit were not a relevant deposit, within the meaning of the Chapter.
(8) (a) Notwithstanding any provision of the Capital Gains Tax Acts, for the purposes of computing chargeable gains arising to a special investment scheme—
(i) each asset which is on the 5th day of April subject to any trust created in pursuance of the scheme shall be deemed to have been disposed of and immediately reacquired by the management company or trustee under the scheme on that day at the asset's market value on that day;
(ii) section 3 of the Capital Gains Tax (Amendment) Act, 1978, shall not have effect;
(iii) section 19 of the Capital Gains Tax Act, 1975, as it applies to assets specified in that section or in any other provision of the Capital Gains Tax Acts, shall not have effect; and
(iv) without prejudice to the treatment of losses on such shares as allowable losses, gains accruing on the disposal or deemed disposal of eligible shares, within the meaning of Chapter III of Part I of the Finance Act, 1984, in qualifying companies, within the meaning aforesaid, shall not be chargeable gains:
Provided that, as respects paragraph 14 of Schedule 1 to the Capital Gains Tax Act, 1975—
(I) subparagraphs (1) and (2), and
(II) subparagraph (3), in so far as a chargeable gain is not thereby disregarded for the purposes of that subparagraph,
shall apply as if subparagraphs (i) and (iii)had not been enacted.
(b) Where in a year of assessment the management company or trustee under a special investment scheme incurs allowable losses on disposals or deemed disposals of assets subject to any trust created in pursuance of the scheme, the amount, if any, by which the aggregate of such allowable losses exceeds the aggregate of chargeable gains on such disposals in the year of assessment, shall be—
(i) disregarded for the purposes of subsection (1) of section 5 of the Capital Gains Tax Act, 1975,
(ii) treated as reducing the income chargeable to incometax arising to the scheme in that year of assessment, and
(iii) to the extent that it is not treated as reducing income arising to the scheme in the said year of assessment, treated, for the purposes of the Capital Gains Tax Acts and this paragraph, as an allowable loss incurred in the next subsequent year of assessment on a disposal of an asset subject to a trust created in pursuance of the scheme.
(9) (a) Distributions received by the management company or trustee under a special investment scheme in respect of eligible shares, which are subject to any trust created in pursuance of the scheme, shall not be chargeable to income tax:
Provided that, notwithstanding subsection (7) or section 88 of the Corporation Tax Act, 1976, the tax credit in respect of a distribution to which this paragraph applies shall be disregarded for all the purposes of the Tax Acts and the Capital Gains Tax Acts.
(b) Notwithstanding section 27 of the Finance Act, 1984, the Revenue Commissioners shall not designate a special investment scheme for the purposes of Chapter III of Part I of the said Act.
(c) In this subsection “eligible shares” means eligible shares, within the meaning of Chapter III of Part I of the Finance Act, 1984, in qualifying companies, within the meaning aforesaid.
(10) (a) Any payment made to a holder of special investment units by the management company or trustee under the special investment scheme concerned by reason of rights conferred on the holder as a result of holding such units shall not be reckoned in computing total income for the purposes of the Income Tax Acts.
(b) (i) Section 32 of the Capital Gains Tax Act, 1975, shall not apply to a special investment scheme or the disposal of special investment units, and
(ii) no chargeable gain shall accrue on the disposal of, or of an interest in, special investment units.
(c) Notwithstanding any provision of the Income Tax Acts or the Capital Gains Tax Acts, the holder of special investment units of a special investment scheme, shall not be entitled to any credit for, or payment of, any income tax or capital gains tax paid in respect of income arising to, or capital gains accruing to, the scheme.
14 Special portfolio investment accounts.
14.—(1) (a) In this section—
“designated broker” means a person—
(i) which is a dealing member firm of the Irish Stock Exchange, and
(ii) which has sent to the Revenue Commissioners a notification of its name and address and of its intention to accept specified deposits;
“gains” means chargeable gains within the meaning of the Capital Gains Tax Acts including gains which would, but for the provisions of section 19 of the Capital Gains Tax Act, 1975, be chargeable gains;
“market value” has the meaning assigned to it in section 49 of the Capital Gains Tax Act, 1975;
“ordinary shares”, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital in respect of which the holders have a right to a dividend at a fixed rate but have no other right to share in the profits of the company;
“qualifying shares” means ordinary shares in a company which are—
(i) listed in the official list of the Irish Stock Exchange, or
(ii) dealt in on the smaller companies market, the unlisted securities market or the exploration securities market of the Irish Stock Exchange,
other than—
(I) shares in an investment company within the meaning of Part XIII of the Companies Act, 1990,
(II) shares in an undertaking for collective investment in transferable securities within the meaning of the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 1989 (S.I. No. 78 of 1989), or
(III) shares in a company being shares the market value of which may be expected to approximate at all times to the market value of the proportion of the assets of the company which they represent;
“relevant income or gains” means the aggregate of the income and gains, including losses, arising from relevant investments:
Provided that only so much of income arising to or gains accruing to the special portfolio investment account shall be relevant income or gains as is or is to be—
(i) paid to, or
(ii) accumulated or invested for the benefit of,
the individual in whose name the special portfolio investment account is held, or would be so paid, accumulated or invested if any gains accruing to the account in accordance with paragraph (c) of subsection (4) were gains on an actual disposal of the assets concerned;
“relevant investment” means an investment in—
(i) qualifying shares and specified qualifying shares, or
(ii) qualifying shares, specified qualifying shares and securities,
as the case may be, acquired by a designated broker by the expenditure of money contributed by way of a specified deposit, and held by a designated broker in a special portfolio investment account;
“securities” means securities—
(i) issued under the authority of the Minister for Finance, or
(ii) issued by the Electricity Supply Board, Radio Telefís Éireann, the Industrial Credit Corporation public limited company, Bord Telecom Éireann, Irish Telecommunications Investments public limited company, Córas Iompair Éireann, ACC Bank public limited company, Bord na Móna, Aerlínte Éireann cuideachta phoiblí theoranta, Aer Lingus public limited company, or Aer Rianta cuideachta phoiblí theoranta,
which are listed in the official list of the Irish Stock Exchange;
“special portfolio investment account” means an account, opened on or after the 1st day of February, 1993, in which a relevant investment is held and in respect of which the conditions referred to in subsection (1) (c) are complied with;
“specified deposit” means a sum of money paid by an individual to a designated broker for the purpose of acquiring assets which will form part of a relevant investment;
“specified qualifying shares”, in relation to a special portfolio investment account, means qualifying shares in a company which, when the shares are acquired for the account, has an issued share capital the market value of which is less than £100,000,000.
(b) For the purposes of this section, Chapter IV of Part I of the Finance Act, 1986, shall be construed and have effect—
(i) as if references to “deposit”, “interest”, “relevant deposit”, “relevant deposit taker”, “relevant interest” and “special savings account” were, respectively, references to “specified deposit”, “income or gains”, “relevant investment”, “designated broker”, “relevant income or gains” and “special portfolio investment account” as defined in paragraph (a), and
(ii) as if subsections (4) and (5) of section 33 had not been enacted.
(c) Notwithstanding subsection (3), section 37A (inserted by the Finance Act, 1992, and amended by this Act) of the Finance Act, 1986, shall apply to a special portfolio investment account—
(i) as if paragraphs (b), (c), (cc), (d) and (e) of subsection (1) of that section had not been enacted, and
(ii) as if the conditions in subsection (2) of this section had been included in the said subsection (1).
(2) The conditions referred to in subsection (1) (c) (ii) are as follows:
(a) each special portfolio investment account and all assets held in such an account shall be kept separately from all other investment accounts, if any, operated by a designated broker;
(b) the amount of a specified deposit or, if there is more than one, the aggregate of such amounts in respect of assets held at the same time as part of a special portfolio investment account shall not exceed £50,000;
(c) the designated broker shall ensure that the aggregate of the market value of a relevant investment does not exceed £50,000 at any time on or after the fifth anniversary of the date on which the first specified deposit was made by an individual in respect of that relevant investment;
(d) the aggregate of the consideration given for shares which are, at any time before the 1st day of February, 1994, assets of a special portfolio investment account shall not be less than—
(i) as respects qualifying shares, 40 per cent., and
(ii) as respects specified qualifying shares, 6 per cent.,
of the aggregate of the consideration given for the assets of the account at that time;
(e) the aggregate of the consideration given for shares which are, at any time within the year ending on the 31st day of January, 1995, assets of a special portfolio investment account shall not be less than—
(i) as respects qualifying shares, 45 per cent., and
(ii) as respects specified qualifying shares, 9 per cent.,
of the aggregate of the consideration given for the assets of the account at that time;
(f) the aggregate of the consideration given for shares which are, at any time within the year ending on the 31st day of January, 1996, assets of a special portfolio investment account shall not be less than—
(i) as respects qualifying shares, 50 per cent., and
(ii) as respects specified qualifying shares, 12 per cent.,
of the aggregate of the consideration given for the assets of the account at that time;
(g) the aggregate of the consideration given for shares which are, at any time on or after the 1st day of February, 1996, assets of a special portfolio investment account shall not be less than—
(i) as respects qualifying shares, 55 per cent., and
(ii) as respects specified qualifying shares, 15 per cent.,
of the aggregate of the consideration given for the assets of the account at that time;
and for the purposes of—
(I) paragraphs (b) and (c), a disposal of shares or securities, being shares or securities, as the case may be, of the same class acquired for a special portfolio investment account at different times, shall be assumed to be a disposal of shares or securities, as the case may be, acquired later, rather than of shares or securities, as the case may be, acquired earlier for the special portfolio investment account, and
(II) paragraphs (d) to (g), the amount of the consideration given for shares shall be determined in accordance with the provisions of section 9 of the Capital Gains Tax Act, 1975, and paragraph 4 of Schedule 1 to the Capital Gains Tax (Amendment) Act, 1978.
(3) The provisions of Chapter IV of Part I of the Finance Act, 1986, shall, subject to the provisions of this section and with any other necessary modifications, apply to special portfolio investment accounts as they apply to special savings accounts.
(4) Notwithstanding any other provision of the Tax Acts and the Capital Gains Tax Acts—
(a) where, for any year of assessment, a loss arises from the computation of relevant income or gains that loss shall be included in the computation of the relevant income or gains of the special portfolio investment account for the next subsequent year of assessment, and, in so far as relief for the loss cannot be so given, then it shall be set against such relevant income or gains in the next year of assessment and, where appropriate, in each subsequent year of assessment in so far as it cannot be so relieved and no further relief shall be allowed under any provision of the Tax Acts or the Capital Gains Tax Acts in respect of that loss;
(b) (i) subsection (4) of section 13, subsections (1) and (2) of section 16 and section 19 of the Capital Gains Tax Act, 1975, and
(ii) section 3 of, and paragraph 8 of Schedule 1 to, the Capital Gains Tax (Amendment) Act, 1978,
shall not apply or have effect in relation to any gains referable to a relevant investment;
(c) for the purpose of computing relevant income or gains of a special portfolio investment account for a year of assessment each asset of a special portfolio investment account on the 5th day of April in that year of assessment shall be deemed to have been disposed of and immediately reacquired by the designated broker on that day at the asset's market value on the said day:
Provided that—
(i) this paragraph shall apply with effect from the 5th day of April, 1994, and
(ii) the year of assessment 1993-94 shall, for the purposes of the paragraph, be deemed to be the period from the 1st day of February, 1993, to the said 5th day of April, 1994;
(d) subject to subsection (5), where in a year of assessment the relevant income or gains of a special portfolio investment account includes a distribution from a company resident in the State, the aggregate of the amount or value of that distribution and the amount of the tax credit in respect of the distribution shall be taken into account in computing the relevant income or gains for that year of assessment and the designated broker may set the tax credit against appropriate tax payable in respect of that special portfolio investment account for the year of assessment in which the distribution is made and, where the tax credit exceeds that appropriate tax, may claim to have the excess paid to him in his capacity as the designated broker for that special portfolio investment account;
(e) a tax credit in respect of a distribution to which paragraph (d) applies shall not be available for any purpose other than that specified in that paragraph;
(f) capital gains tax shall not be chargeable on the disposal of assets held as part of a relevant investment but this paragraph shall not prevent any such disposals from being taken into account in computing the amount of relevant income or gains on which appropriate tax is payable.
(5) (a) Without prejudice to the treatment of losses on eligible shares as allowable losses, gains accruing on the disposal or deemed disposal of eligible shares in qualifying companies shall not, for the purposes of computing appropriate tax in accordance with subsection (6), be treated as gains.
(b) Distributions included in the relevant income or gains of a special portfolio investment account in respect of eligible shares shall not be taken into account in computing appropriate tax in accordance with subsection (6):
Provided that, notwithstanding the provisions of paragraph (d) of subsection (4) or section 88 of the Corporation Tax Act, 1976, the tax credit in respect of a distribution to which this subsection applies shall be ignored for all the purposes of the Tax Acts and the Capital Gains Tax Acts.
(c) In this subsection—
“eligible shares” has the same meaning as it has in section 12 (2) of the Finance Act, 1984;
“qualifying companies” has the same meaning as it has in section 15 of the Finance Act, 1984.
(6) (a) For the purposes of sections 32 and 33 of the Finance Act, 1986, a designated broker shall, in relation to each special portfolio investment account, be deemed to have made a payment on the 5th day of April in each year of assessment of the amount of relevant income or gains for that year of assessment and the designated broker shall be liable to make a payment of appropriate tax in relation to such payment and the designated broker may deduct an amount on account of any such payment of appropriate tax and the individual beneficially entitled to the assets in the special portfolio investment account shall allow such deduction from any income or from the proceeds of the sale of any assets which the designated broker holds as part of the special portfolio investment account:
Provided that where there are no such funds or insufficient funds available out of which the designated broker may satisfy the appropriate tax, the amount of such tax shall be an amount due to the designated broker from the person beneficially entitled to the relevant investment.
(b) This subsection shall apply with effect from the 5th day of April, 1994, and, for the purposes of this subsection, the year of assessment 1993-94 shall be deemed to be the period from the 1st day of February, 1993, to the said 5th day of April, 1994.
(c) For the purposes of this section, section 33 of the Finance Act, 1986, shall apply and have effect for the year 1993-94 and for each subsequent year of assessment as if, in subsection (2) of that section, for “within 15 days from the end of the year of assessment” there were substituted “on or before the 1st day of November following that year of assessment”.
(7) The provisions of Chapter III of Part I of the Finance Act, 1984, shall not apply or have effect in relation to any shares which form part of a relevant investment.
15 Amendment of provisions relating to interest payments by certain deposit takers.
15.—(1) Chapter IV of Part I of the Finance Act, 1986, is hereby amended—
(a) in subsection (1) of section 31—
(i) by the substitution of the following definition for the definition of “building society”:
“‘building society’ means a building society within the meaning of the Building Societies Act, 1989, or a society established in accordance with the law of any other Member State of the European Economic Community which corresponds to that Act;”,
(ii) by the insertion, with effect as on and from the 3rd day of December, 1990, in paragraph (a) of the definition of “relevant deposit” of the following subparagraph after subparagraph (ia) (inserted by the Finance Act, 1991):
“(ib) the State acting through the National Treasury Management Agency,”,
(iii) in the definition of “relevant deposit taker”—
(I) by the substitution of the following paragraph for paragraph (a):
“(a) a person who is a holder of a licence granted under section 9 of the Central Bank Act, 1971, or a person who holds a licence or other similar authorisation under the law of any other Member State of the European Economic Community which corresponds to a licence granted under the said section 9,”,
and
(II) by the insertion, with effect as on and from the 30th day of October, 1992, of the following paragraph after paragraph (e):
“(ee) ICC Investment Bank Limited,”,
(b) in subsection (1) (as amended by the Finance Act, 1992) of section 35, by the substitution of the following paragraphs for paragraph (c):
“(c) the amount of any payment of relevant interest shall be regarded as income chargeable to tax under Case IV of Schedule D and under no other Case or Schedule and shall be taken into account in computing the total income of the person entitled to that amount, but, in relation to such a person (being an individual)—
(i) except for the purposes of a claim to repayment under section 39 (2), the specified amount within the meaning of section 1 or 2 of the Finance Act, 1980, and
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